Question

Prior to adjusting entries, Prepaid Rent had a balance of $8,300. The following year-end adjusting entry was made by the company: Rent Expense 6,800 Prepaid Rent 6,800 What balance would be shown for Prepaid Rent in the adjusted trial balance?

A) $1,500
B) $6,800
C) $8,300
D) $15,100

Answer 1

The adjusted balance of Prepaid Rent would be $1,500.

Step-by-step explanation:

Prepaid Rent is an asset account that represents the future rent payments made in advance. When the adjusting entry is made to record Rent Expense and reduce Prepaid Rent, the balance of Prepaid Rent is decreased by the amount of the entry. In this case, the adjusting entry reduces the balance of Prepaid Rent by $6,800. Therefore, the adjusted balance of Prepaid Rent would be $1,500 ($8,300 - $6,800).